Damodar Lal Kabra vs Income Tax Officer, B-Ward and Others

C.M. Lodha, C.J.—By the petition under art. 226 of the Constitution, the petitioner has prayed that notices marked Exs. 1, 2 and 10, dated December 30, 1968, December 20, 1968 and March 27, 1965, respectively, issued to the petitioner by the income tax Officer, B-Ward, Jodhpur, may be quashed. It has also been prayed that the said ITO be restrained from taking proceedings against the petitioner under s. 147 of the I.T. Act, 1961 (hereinafter to be referred to as "the Act"), for the assessment year 1948-49. The petitioner is a resident of Jodhpur in the State of Rajasthan. His case is that he received notice Ex. 1 on December 31, 1968, wherein it was mentioned that though notice under s. 148 of the Act for the assessment year 1948-49 had been issued to the petitioner and served upon him by registered post on March 31, 1965, yet, the petitioner had not filed the return so far. The petitioner was, therefore, directed to file the return. He was also asked to produce necessary evidence regarding investment made by him in shares of R.B. Lodha & Company, Calcutta, and Mineral Mining Company, Bombay, along with the source of investments. A notice under s. 142(1) of the Act (marked Ex. 2) for production of necessary account books, etc., in respect of the relevant assessment year, was also enclosed with Ex. 1. On receipt of the letter Ex. 1, the petitioner submitted his reply on January 9, 1969, a copy of which has been placed on record and marked Ex. 3. The petitioner denied receipt of notice on March 31, 1965, or any other date alleged to be dated March 27, 1965, and also, inter alia, pleaded that the ITO had no jurisdiction to take proceedings for assessment or reassessment under s. 147 of the Act. As for the notice Ex. 1 dated December 30, 1968, the petitioner''s objection was that it has been issued after the expiry of the limitation prescribed under s. 149 of the Act, and consequently, no assessment or reassessment could take place on its basis. It may be pointed out that the notice dated March 27, 1965, was served upon one Madhav Lal Kabra. The petitioner submitted an affidavit on January 10, 1969, wherein it was sworn by him that the notice dated March 27, 1965, had been served upon one Madho Prasad, who was a complete stranger to him. It was however stated that the notice under s. 142(1) of the Act, dated December 20, 1968 (Ex. 2), received along with the letter, Ex. 1, was the first notice which had been received by the petitioner in respect of the relevant year. A copy of this affidavit has also been placed on record and marked Ex. 4. A request was also made by the petitioner by another letter of the same date that he may be given an opportunity to substantiate his plea of non-service of the notice dated March 27, 1965, and also prayed that the question of jurisdiction of the ITO to initiate proceedings under s. 147 of the Act be decided before the petitioner is called upon to furnish a return. On January 13, 1969, the petitioner submitted another affidavit stating therein that another notice under s. 148 of the Act issued on March 4, 1965, and alleged to have been served upon one Damodar Lal M. Kabra of Malagaon, Nasik, in the State of Maharashtra, was never served upon him, but was served on some other person not known to the petitioner. A copy of this affidavit has been placed on record and marked Ex. 7. It appears that thereafter on February 13, 1969, the ITO examined the petitioner on the question of service of the two notices dated March 4, 1965, and March 27, 1965, and by his letter dated February 14, 1969 (Ex. 11), the ITO observed that in the circumstances of the case he was serving upon the petitioner a certified copy of the notice dated March 27, 1965, as the earlier service of this notice effected by registered post had been challenged by the assessee. Ex. 10 is the certified copy of the notice sent by the ITO with his forwarding letter dated February 14, 1969, marked Ex. 11. After receipt of this letter, the petitioner has filed the present writ petition for the reliefs mentioned above.

A reply to the writ petition has been filed on behalf of the ITO wherein it has been asserted that the notices dated March 4, 1965, and March 27, 1965, were duly served upon the petitioner and that the notice has been served upon the petitioner under s. 148 of the Act, as the ITO had reason to believe that the petitioner''s income for the assessment year 1948-49 had escaped assessment.

We have heard Mr. Arora on behalf of the petitioner and Shri Rajendra Mehta on behalf of the revenue.

Two points have been canvassed by Mr. Arora in support of the petition. It has been urged that neither the notice dated March 4, 1965, nor the notice dated March 27, 1965, has been served upon the petitioner and this is an irresistible inference which the court should draw from the letter of the ITO himself dated February 14, 1969, marked Ex. 11, whereby a certified copy of the notice dated March 27, 1965, has been served upon the petitioner. It is argued that under s. 149 of the Act, no notice under s. 148 of the Act can be issued and served for the relevant assessment year where more than 16 years have elapsed from the end of that year, even in a case where the income chargeable to tax which has escaped assessment, amounts to or is likely to amount to Rs. 50,000 or more for that year. On the other hand, Shri Mehta has argued that, in the facts and circumstances of the case, the only reasonable inference is that both the notices issued to the petitioner during the year 1965 were duly served upon him. In this connection, he has invited our attention to s. 27 of the General Clauses Act and s. 282 of the I.T. Act.

The other point raised by Shri Arora is that the necessary foundation had not been laid by the ITO for taking proceedings under s. 147 of the Act, inasmuch as he had no reason to believe that for the assessment year 1948-49, any income of the petitioner chargeable to income tax had escaped. In this connection, he has placed reliance on Income Tax Officer ''A'' Ward, Calcutta and Another Vs. Ramnarayan Bhojnagarwala, and Income tax Officer, Calcutta and Others Vs. Lakhmani Mewal Das, On the other hand, Sri Rajendra Mehta has submitted that it would be clear from the averments made by the ITO in para. 14(f) of his reply to the writ petition that from the material available to the ITO he had reason to believe that investments in the assessment year 1948-49 by the petitioner in Part A States exceeded Rs. 50,000, in respect of which the petitioner had not disclosed the source of his income, and consequently, there was escapement of tax. It is argued by Shri Mehta that in the notice Ex. 1 itself, the petitioner was called upon to adduce evidence regarding investment in shares of the two companies along with the source of investment. There have been a series of decisions of the Supreme Court under s. 34 of the Indian I.T. Act of 1922 as well as under s. 147 of the I.T. Act of 1961, and the law appears to us to be well settled. In this connection, reference may be made to Calcutta Discount Company Limited Vs. Income Tax Officer, Companies District, I and Another, S. Narayanappa and Others Vs. Commissioner of Income Tax, Bangalore, , D.L.F. Housing Construction (P) Ltd. Vs. Delhi Municipal Corpn. and Others, , Income tax Officer, Calcutta and Others Vs. Lakhmani Mewal Das, and Income Tax Officer ''A'' Ward, Calcutta and Another Vs. Ramnarayan Bhojnagarwala, . However, for the decision of the case in hand, we may not address ourselves to this aspect as, in our opinion, the case can be disposed of on the first point and the learned counsel for the petitioner also made a prayer that this question may not be decided at this stage. However, we are unable to accede to the submission of the learned counsel for the petitioner that the ITO, while issuing the letter, Ex. 11, had come to the conclusion that service of notices dated March 4, 1965, and March 27, 1965, on the petitioner had not been effected, when they purport to have been served upon him. It is only by way of extending facility to the petitioner that a certified copy of the notice dated March 27, 1965, was served upon him again. But, at the same time, it is true that the ITO has not given a finding on the question whether the notices dated March 4, 1965, and March 27, 1965, were duly served upon the petitioner. It is apparent that the question whether these notices were duly served upon the petitioner or not, is essentially a question of fact which should be determined by the Commissioner of Income Tax, West Bengal III and Others Vs. Ramendra Nath Ghosh, it was observed that the question whether the assessee had been served in accordance with law or not, was essentially a question of fact, for which the assessee should not be allowed to invoke the extraordinary jurisdiction of the court. Thus the assessee should have first got the question of service determined by the ITO himself instead of rushing to this court on receipt of the letter, Ex. 11. Accordingly, we are not in a position to grant any relief to the petitioner at this stage in exercise of our extraordinary jurisdiction. The writ petition has no force and is hereby dismissed. In the circumstances of the case, we make no order as to costs.